THURSDAY REPORT 11/10/2016

 

Things are looking rather poor at the moment for metal miners as the bearish scenario gains momentum. However, this scenario won’t be confirmed in miners until prices break below the neckline in GDX and the HUI. Then prices need to remain below the neckline during any bounce/rally for roughly 10-trading days.

The senior mining gauge entered excellent buy zone status. Nevertheless, with the possibility of an additional 25% decline looming (bearish scenario), we need to wait for practical evidence of a bottom.

There was buying on weakness numbers in GDXJ today; provided by the WSJ.

bow-gdxj

-US DOLLAR- The dollar cycle bottomed, and we are 4-days into a new cycle. It looks like prices will breakout above 100. We will cover potential targets in the Weekend Newsletter.

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-JAPANESE YEN- After a brief bounce to 97.22, the Yen has accelerated it’s decline into an intermediate cycle low. We should see prices drop to the 50% retracement before bottoming.

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-GOLD- The spike high to $1,338 distorted the cycle count and it’s unclear where we are. Prices breaking below $1,243.20 will support an intermediate cycle high, and that prices will drop further into early 2017. I still believe prices would remain above $1,045 if this occurs.

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-SILVER- Silver remains stubbornly strong relative to gold and miners. If prices don’t start moving lower soon, I’ll become suspicious.

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-GDX- Prices crashed through the $23.43 “line in the sand” and settled at the neckline. Prices are short-term oversold, but we may see a gap lower tomorrow morning through the neckline and another strong down day. I imagine investors will panic after today’s action; there must be a truckload of stop-loss orders just under $21.94.

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-GDXJ- Prices closed below the trendline, the 200-day MA and settled just pennies away from breaking the October $36.96 low. However, they are still substantially above the June $32.60 intermediate low. Note: There was some buying on weakness numbers (342-million) today in GDXJ.

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-SLW- Silver Wheaton missed earnings, and the stock crashed nearly 17% and into my original target area.

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-SPY CORRELATION CHART- In 2015 prices dropped to oversold levels (red arrows) near the 200-day MA and then quickly rallied to a new high, only to fall sharply a month later. If prices follow the 2015 guide, we should see a top form under the trendline within a week or two.

spy-potential-correlation

-SPY- I will be watching for signs of a reversal below the trendline. Consecutive closes above the trendline will void the 2015 price correlation.

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-WTIC- Oil prices reached a high of $45.95 during this bounce, and it may be over. Prices formed a bearish engulfing pattern today; we could begin moving lower again tomorrow.

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Watch tomorrow’s open in miners, it could be exciting.

As always, I’ll update if something presents itself.